The only Australians to have recorded an average drop in weight in the study were those aged over 65. Photograph: Lucas Jackson/Reuters

Taxing junk food and subsidising healthy food have been flagged as potential solutions to Australia’s diabetes problem after a study found the average young Australian has gained 6.7kg in the past 12 years.

It found that Australians aged between 25 and 34 weighed 6.7kg more than they did in 1999 and the only age groups to have their average weight drop were those over 65.

People with previously known diabetes had a similar risk of dying as smokers, and obese people were twice as likely to develop depression, according to the report.

Joint chief investigator Professor Jonathan Shaw of the Baker IDI Heart and Diabetes Institute said radical action, such as an anti-obesity campaign similar to anti-smoking campaigns, may be needed as well as government initiatives such as taxing junk food and subsidising healthy foods.

"One of the biggest contradictions is that people are living longer but they're being diagnosed with more disease. So their quality of life is being compromised," said Shaw.

"As a community, we need to be prepared to take some tough decisions.

"It's not impossible. Look at what we've achieved with gun control, smoking and water restrictions."

The report describes diabetes as one of the most challenging public health issues and says socioeconomic status plays a significant role in diabetes risk, with people in disadvantaged areas twice as likely to develop the disease.

"The AusDiab data highlights the extent to which a person's environment makes a contribution to their wellbeing.”

Every year, 0.7% of Australian adults develop diabetes, 3% develop high blood pressure and 0.4% to 0.7% develop signs of kidney damage.

"The health and wellbeing of a whole generation of young Australians is being compromised by a lifestyle rich in energy-dense foods and low on physical activity," Shaw said.

While people aged 25 to 34 gained the most weight, 6.7kg, people aged 35 to 44 put on 4.7kg, the average weight of someone aged 45 to 54 increased by 2.7kg and those aged between 65 and 74 lost 2.1kg.

Researchers first went out to more than 40 randomly selected locations in 1999 and interviewed more than 11,000 people as well as putting them through physical tests. Over the years about 6,000 people came back to do the test in 2004-05 and 2001-12.

About 2,000 could not be physically tested by researchers and so self-reported their result, with researchers finding people were likely to estimate they were physically active 50% more of the time than they actually were.

The report also points to Australians developing a more sedentary lifestyle, spending twice as much time sitting than they thought they did.

"We have a big problem. If we want to be serious about it we have to recognise it is not something that can be solved only through telling individuals what they need to do," Shaw said.

"It's complicated, but we need to find ways to make healthy food options the cheap options."